Fierce competition forces company to drastically cut workforce and close plants, including its only one in Finland.

Nokia said that it would book additional restructuring charges of around $1.3bn by end of 2013 [EPA]

Finnish cell phone maker Nokia will lay off 10,000 jobs globally and close plants by the end of 2013, the company has said, while it warned the second-quarter loss from its cell phone business would be larger than expected.

The cuts, announced on Thursday, mean Nokia will close some research and development projects, including in Germany and Canada.

The reductions include the closure of Nokia's only plant in Finland, and bring the total planned job cuts at the group since Stephen Elop took over as chief executive in 2010 to more than 40,000.

Nokia said on Thursday that it would book additional restructuring charges of about $1.3bn by the end of 2013.

Although it plans "to significantly reduce its operating expenses", Nokia says it will focus on smartphones and feature phones and intends to expand location-based services.

Nokia also said that "competitive industry dynamics" in the second quarter would hit its smartphone sector to a "somewhat greater extent than previously expected" and that no improvement was expected in the third quarter.

"Nokia is significantly increasing its cost reduction target for devices and services in support of the streamlined strategy announced today," said Timo Ihamuotila, the company's chief financial officer.

"With these planned actions, we believe our devices [and] services business has a clear path to profitability. Nokia intends to maintain its strong financial position while proceeding aggressively with actions aimed at creating shareholder value."

Low profit

The company, whose cash position is increasingly scrutinised by investors, also said restructuring-related cash outflows would be about $816m in the remaining three quarters of 2012 and about $754m in 2013.

Shares in Nokia fell 9 per cent in early trading and were down 6.9 per cent at 0711 GMT.

Nokia stock has crashed more than 70 per cent since it announced in February 2011 that it was dropping its own Symbian smartphone operating software and switching to Microsoft's largely untried Windows Phone system.

"These changes underline the seriousness of the challenges Nokia is facing, particularly in light of the eye-watering competition from Apple and Samsung," said Ben Wood, head of research at CCS Insight.

Nokia also said it would sell luxury phone business Vertu to venture firm EQT.

Nokia is fighting fierce competition from Apple's iPhone and other makers using Google's popular Android software, including Samsung and HTC of Taiwan.

It is also being squeezed in the low-end by Asian manufacturers making cheaper phones, such as China's ZTE.